P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)



Hearing No. 95002070MD

An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on the applicable law, records and evidence in this case, the commission makes the following:


The employe worked from November 23, 1993 until August of 1994, at performing telemarketing, fund-raising, and construction work, for the employer. Sometimes he received checks drawn on the personal checking account of the employer's director and his wife, and sometimes checks were from Soldiers for Jesus Christ Peniel Christian Church.

The employer's founder, director and pastor for 25 years has been Kenneth Sortedahl. Mr. Sortedahl described the employer as a Christian Boarding School. The employer was incorporated in 1971 in St. Croix County and goes by the name Soldiers of Jesus Christ. (1) The employer testified that its school's name is Peniel, but the mission and the school are under the Soldiers of Jesus Christ Corporation.

The school takes in students with life control problems, i.e. children who have been in trouble with the law, in their homes, and in their community. Students stay at the school for one year. The school consists of 150 acres with 3 houses, one for a school, one for a boy's dorm, and one for a girl's dorm. There are three trailer houses for staff. There is also a barn. At the time of the hearing the employer had 18 students and 7 people performing services for the school. The employer operates mainly on donations. It is supported by churches of all denominations. It does charge tuition but students are not required to pay a certain amount. It costs up to $1,000 per month, but not all the students pay that much.

Christian services occur twice a day including devotions in the morning and evening. Christian services are conducted in the school itself. The employer holds Christian services in the meal area after the tables are cleared. The employer uses a "Christian" curriculum. Mr. Sortedahl is a Lutheran pastor but does not preach Lutheran doctrine. If he did that, Jewish people would not send their children because the employer would make Christians out of them. The employer just preaches the Bible in its services. The employer does not follow any doctrine nor does it criticize any doctrines. The employer considers the school to be "cross-denominational." It takes students of any denomination or no denomination. The employer has baptism services on the ground and is open to having visitors come to services.

According to Mr. Sortedahl the "IRS has always recognized us" as a legitimate Christian organization. However, a letter from the IRS to the employe dated October 17, 1994, states that the Soldiers of Jesus Christ, Inc., Peniel Christian School has not been recognized by the IRS as exempt. In addition, a letter dated November 2, 1994, from the State of Wisconsin to the employe states that Soldiers of Jesus Christ/Peniel Christian School is not registered as a charitable organization in the State of Wisconsin.

The issue to be decided is whether the employe's services for the employer were covered under the Wisconsin Unemployment Insurance Law. The employer maintains that the services were not in covered employment because the employer is excluded under Wis. Stat. 108.02(15)(h) which provides as follows:

"(h) `Employment' as applied to work for a nonprofit organization, except as such organization duly elects otherwise with the department's approval, does not include service:

"1. In the employ of a church or convention or association of churches;

"2. In the employ of an organization operated primarily for religious purposes and operated, supervised, controlled, or principally supported by a church or convention or association of churches;"

The employer's argument is that it is not simply a Christian school, but it is a school and a church. The employer maintains that it was incorporated as both a church and school. However, accepting that the employer incorporated as both a church and school, the mere fact of incorporation does not establish that it is in fact a church for unemployment insurance purposes. (2)

Neither Wisconsin statutes nor FUTA defines church. A number of courts have been faced with determining whether an organization is a church for state unemployment tax purposes. Courts have relied on the IRS's 14 criteria to determine whether an organization is a church. Those 14 criteria are:

(1) a distinct legal existence
(2) a recognized creed and form of worship
(3) a definite and distinct ecclesiastical government
(4) a formal code of doctrine and discipline
(5) a distinct religious history
(6) a membership not associated with any other church or denomination
(7) an organization of ordained ministers
(8) ordained ministers selected after completing prescribed studies
(9) a literature of its own
(10) established places of worship
(11) regular congregations
(12) regular religious services
(13) Sunday schools for religious instruction of the young
(14) schools for the preparation of its ministers.

The IRS's criteria was used by the court in Nampa Christian Schools Foundation, Inc. v. State of Idaho, 110 Idaho 918, 719 P.2d 1178 (1986). In Nampa, the claimant worked as an office worker for Nampa Christian until laid off. She then filed for unemployment insurance. The State statute involved is virtually identical to the Wisconsin statute involved in this case. The appeals examiner ultimately found that she was entitled to unemployment insurance. The Industrial Commission reversed holding that the State statute which dealt with exemptions from coverage violated the Establishment Clause of the First Amendment to the United States Constitution.

Nampa was a school organized by a group of parents interested in providing a "Christian" education for high school students. The school was in the hands of a board of trustees elected by corporation members. Corporation members had to be parents of former or current students and had to be in good standing of a local church or of a fellowship that did not recognize membership. Corporation members had to believe in Jesus Christ, have a personal relationship with him, and agree with the schools Statement of Faith. (3) Teachers were required to have beliefs consistent with the Statement of Faith, to integrate the Statement of Faith into their teaching, and to attend regular faculty prayer meetings. The churches whose members attended as students did not direct the schools operation, nor did any group of churches band together to control or supervise the school. The school was nondenominational and parents of children attending the school had to agree to stay nondenominational and not inject any doctrinal controversy into the school. (4)

The court applied the 14 IRS factors stating:

"The purpose behind Nampa Christian is not so much to declare a specific body of doctrine, as it is to provide students with a religious education that supports the body of doctrine with which a wide number of fundamentalist churches can agree. Thus, the fourth factor weighs against Nampa Christian being a `church.'

"We likewise find no evidence of a definite ecclesiastical government nor a membership unassociated with other churches [factors three and six]. In fact, participation in Nampa Christian is predicated in part upon an individual's membership in and contribution to a church of his or her choice. While worship does occur, and regularly, it is clear that it is done with the intent of strengthening the students and helping them to prepare for service on behalf of their communities and the `Risen Saviour.' Ex. No. 19. n6.

"The school does not use `ordained ministers' [factors seven and eight]. A tenet of the School's Statement of Faith, in fact, is that the school remain nondenominational. See footnote 1, supra. Considering the factors mentioned above, we are convinced that Nampa Christian is not a church for purposes of I.C. 72- 1316A(g)(1)(i)."

Nampa at 922-923.

The court then turned to the question of whether Nampa was operated primarily for religious purposes and principally supported by an association of churches. As with "church" what constituted a "convention or association of churches" had not been previously defined. The court adopted definition of "The act of associating, or the state of being associated; fellowship; combination for a common purpose." The court further indicated that the term applies to "a cooperative undertaking by churches of differing denominations." The court concluded that "the several different churches which are united by their relationship to Nampa Christian constitute an `association of churches.'" Nampa at 923.

The court further found that Nampa was an organization primarily for religious purposes as it operated for religious purposes and "the school's intent and operations reveals that it is a school with a religious mission and purpose." Nampa at 923. Finally, the court found that while there was no evidence that Nampa was operated, supervised, or controlled by the various churches which had members attending the school, the school was principally supported by the group of churches. The court further stated:

"The statutory language . . . does not require a church's or group of churches' support to be financial in order for that to be recognizable under the statute. The statute merely states "support." While a contribution of money is strong indicia of one's support, it cannot be held, statutorily, to be the only way in which to support an organization. There is no logical reason to differentiate between the types of support an organization may receive. Likewise, there is no statutory command to do so. The key is the quality of the support by a church or group of churches in order for it to qualify for the tax exception. Such is the case here.

"The commission made the finding of fact that Nampa Christian could not exist as a private school without the moral support of those several churches. . . . We hold that this type of support constitutes "principal" support -- if the school "could not exist" without the churches' support, it is dependent upon that support. Such dependency constitutes "principal" support for purposes of [the statute].

"Our holding today is not broad. It does not mean that mere moral support offered by a church or group of churches to an organization operated for religious purposes will qualify that organization for tax exemption status. . . . Rather, our decision states that before tax exemption status can be granted, the Commission must find as fact that such support is necessary for the religious organizations continued operation. . . . "

Nampa, at 924.

In MHS, Inc., UC Hearing No. 8852 (LIRC, July 12, 1991), the commission determined that a nonprofit corporation that operated a formerly Catholic high school met the exclusion contained in Wis. Stat. 108.02(15)(h)2. In doing so, the commission found unpersuasive the Nampa court's holding that "a Christian school that got `moral support' but no financial help from a convention or association of churches fell within [the exclusion]." The commission noted that the "moral support" appeared to have been limited to allowing the school to recruit church members for students. The commission nonetheless found that the exclusion applied stating:

"However, the influence of the Catholic church in this case far exceeds allowing the appellant to recruit for students from the Catholic Archdiocese of Milwaukee. The Catholic church establishes the doctrine and theology under which the school is operated, thereby exercising control. Moreover, should the Catholic church withdraw its tacit approval of Messmer High School as a `Catholic high school', the effect would no doubt be substantial. Messmer High School's principal testified that the Capuchin order would not allow him to serve as principal if the school were not a `Catholic high school.' The Catholic church's approval may thus be viewed as a form of support and control. The Catholic church also provides supervision, control and support through staff and board members who are not only practicing Catholics, but in some instances members of ecclesiastical orders that are part of the Catholic church. The appellant exists to preserve and advance Catholic tradition and the Catholic doctrine. Under the circumstances, the appellant is, to an extent sufficient to satisfy sec. 108.02(15)(h)2, Stats., controlled, operated, supervised or principally supported by the Catholic church."

MHS, at 3.

The commission finds that the employer is not a church. Looking at the IRS's criteria, and recognizing that it is not a question of how many are satisfied, the employer completely meets very few of 14 criteria. Certainly, the evidence presented by the employer doesn't establish that (2) through (9) and (13) and (14) have been met. The employer's attempt to accommodate various religions and be "cross-denominational" doesn't preclude it from being able to meet such criterion as a recognized creed. At least the interdenominational Nampa had its Statement of Faith. As demonstrated by the commission's recitation of the facts in Nampa, the lack of evidence in this case of the role of religion in the employer's existence, let alone its school, is striking. The evidence in Nampa was used to show how religion permeated almost every aspect of the school. In Nampa there was quite extensive evidence about how pervasive religion was in the actual instruction. There is a definite lack of such evidence in this case. The commission simply does not know what constitutes a "Christian" curriculum. The lunchroom may count as an established place of worship and the students and presumably the teachers met twice a day (10 through 12). How open these meetings were to the general public or whether anyone outside of the students and teachers regularly attended such services is not indicated in the record. The only testimony is that the employer is "open to having visitors come to our services" not that visitors do or how they are aware of such services. Simply because the employer holds religious services does not make the employer a church. Clearly, the employe does not work for a convention or association of churches.

The next question is whether the employer is an organization operated primarily for religious purposes. The commission finds that it is not. From the evidence presented at the hearing it is first and foremost a school. Again, there is a lack of testimony about the precise role of religion in the school's curriculum. The lack of testimony establishing that religion pervades the operation of the school makes it difficult to find that the school operates primarily for religious purposes. In fact, it seems the primarily objective of the employer is keeping kids out of trouble while providing an education and room and board.

Even if the commission were to find that the employer operated primarily for religious purposes it would find that it is not "operated, supervised, controlled, or principally supported by a church or a convention or association of churches." Clearly the employer is not operated, supervised or controlled by a particular church or a convention or association of churches. Rather, the question is whether it is "principally supported by a . . . convention or association of churches." In Nampa the court found "moral" support by other churches sufficient. However, the commission in MHS found the type of moral support exhibited in Nampa to be less than persuasive in satisfying the exclusion. Indeed, reviewing the "support" demonstrated by the Catholic church in MHS, it was rather extensive. Here, again, there is really no evidence of any particular church or group or association of churches that has lent support, moral or otherwise, to the employer. Mr. Sortedahl did testify that the employer operates mainly on donations and is supported by churches of all denominations. However, again, the employer does not receive funds from a particular church nor a particular association of or grouping of churches. The exclusion does not apply if an organization is primarily supported by "churches," but by a "convention" or "association" of churches. The commission does not dispute that the employer is religious in nature, but being religious in nature does not satisfy the unemployment insurance exclusion at issue here.

The commission therefore finds that the employer is not a church, it is not operated primarily for religious purposes, and is not supported by a church or convention or association of churches within the meaning of Wis. Stat. 108.02(15)(h).


The decision of the administrative law judge is modified and, as modified, is affirmed. Accordingly, the employe is eligible for benefits based on his services with the employer, if he is otherwise qualified.

Dated and mailed: April 7, 1998
kubeken : 132 : 1  ET  483

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner


The employer's petition contains a number of factual assertions and documentation that were not made or submitted at the hearing. The commission's rules provide that review by the commission is on the record of the case including the synopsis or summary of the testimony or other evidence presented at the hearing. Chapter LIRC 1.04 Wis. Admin. Code. The law requires that the commission's review be based solely on the testimony and documents presented at the hearing before the administrative law judge. Therefore, the commission cannot consider factual assertions made in the petition, or documents submitted with the petition, which were not also made or submitted at the hearing. Since the commission's review must therefore be based on the evidence submitted at the hearing which has already been held, the commission will not address or consider the factual assertions made by the employe which are not supported by the record. The commission has considered the arguments raised by the employer but finds then unpersuasive.


Appealed to Circuit Court. Affirmed February 12, 1999.  Circuit Court decision affirmed by Court of Appeals, per curiam, November 23, 1999. [Court Decision Summaries]

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(1)( Back ) During the hearing the employer was apparently shown a number of documents from its attorney and indicated that it was originally incorporated in 1971 as Soldiers of Jesus Christ and the recertification document dated March 30, 1995 was recorded by the St. Croix Register Of Deeds. Mr. Sortedahl apparently read the last paragraph of that document which stated: "the church and school are a nonprofit organization under Chapter 181 and intend to maintain the organization under the chapter as well as Chapter 187, make this filing to clarify the organization's status as both a church and a school, said articles are recorded on 12/23/91 and as amended and recorded on 12/31/92 are hereby incorporated by reference as attached herein." The document referred to was not admitted into the record.

(2)( Back ) The commission does agree with the employer that the church exclusion is not dependent upon the existence of a physical "house of worship." St. Martin Evangelical Lutheran Church et al v. South Dakota, 451 U.S. 772 (1981).

(3)( Back ) The Statement of Faith consists of thirteen statements of belief (1) in the Holy Scriptures, (2) in the one triune God, (3) in the Lord Jesus Christ, (4) in the Holy Spirit, (5) in the creation and fall of man, (6) in salvation by grace through faith, (7) in righteous living and good work, (8) in the existence of Satan, (9) in the second coming of Christ, (10) in future life, bodily resurrection and eternal judgment, (11) in one true Church, (12) in separation from the world, and (13) in educating young people according to the foregoing principles and teaching in a non-denominational manner.

(4)( Back ) The court went on to describe the school: "Religious ideological practices permeate Nampa Christian's affairs. The school's articles of incorporation state the purposes of the school as follows: (1) to instruct in all subjects `on the basis of the Biblical philosophy of creation, history and destination'; (2) `to teach the Bible, Biblical and historical theology, the science of Christian education, the history and methods of missions, and other related subjects'; (3) `to educate persons through [its] schools and, as the opportunity may arise, through additional course work, Bible Institute and Seminary training as may be appropriate.' Ex. No. 19, p. 1. Students who attend Nampa Christian agree to `revere God and His established authority.' Ex. No. 29, p. 6. Students are also told that `Christian conduct' is expected of them. Id. Most students in grades 7-12 sign the school's Statement of Faith. Ex. No. 30, p. 14. No subject taught at Nampa Christian is regarded as `secular.' Ex. No. 23, pp. 1-2. Students attend chapel services weekly, and Bible study is required of all junior high and high school students. In short, as the Industrial Commission noted, `[r]eligion pervades every aspect of the educational program of Nampa Christian Schools, Inc.' R., Vol. 2, p. 13. The Commission also stated that, although Nampa Christian's Statement of Faith is unique, it `is consistent with the beliefs of a number of churches in the Treasure Valley area, and Nampa Christian could not exist as a private school without the moral support of those several churches.' R., Vol. 2, p. 14 (emphasis added). Eighty-five percent of the school's financial support comes from tuition paid by students, and 15 percent comes from donations and other sources. Only a small amount of financial support comes from individual churches. In fact, less than one percent of the financial support comes from the churches themselves." Nampa, at 919.